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I’d love to have a reality TV style interview process when hiring financial planners for our financial education firm. Granted, we have a rigorous interview process—some have called it grueling—since we try to put the candidates in true-to-life situations to, first of all, see if they know their stuff and secondly see if they are a fit for our culture. The best set up would be a seven day elimination – they live together in a house full of cameras and we’d put them through all kinds of different experiences. We vote one off each day until we were left with the best candidates who are the best fit for our firm. This experiment would bring out their natural selves in the process.

Reality TV style interviewing isn’t a practical hiring practice for us, or certainly for an individual finding a financial advisor, but there are other ways to “get into your advisor’s head.” You can learn a lot by listening closely to their answers. Here are a couple of harmless questions that can provide deeper insight than you’d imagine at first glance. The first question is “what was your worst investment decision?” closely followed by “what was your best investment decision?”

Pay attention to the examples they give --- the insight or lack of it. For example, an advisor who doesn’t want to show they ever made a bad investment and gives you a cursory answer may end up hiding something from you in the future. One who laughs about their poor investment but didn’t learn anything could continue to make the same mistake over and over again, but with YOUR account. Learning about their best investment could shed light on possible bias since their best investment may have been great for them but might not be right for you.

I actually put these questions out to our Think Tank of Certified Financial Planner™ professionals to gain some insight into them and here are the answers I got back from three of them with some commentary from me:

Scott Spann, CFP®, EA:

My worst investment was a global technology fund that actually resulted in around a 400% rate of return with just around a one year holding period. This was late '90s right in the heart of the technology boom. I was in graduate school at the time and luckily I sold the fund right around the peak and used the proceeds for a down payment on my first home. You may be wondering why this was a problem since it certainly sounds like a winner. Well, while my first real exposure to stock market investing was such a success it set me up for some pretty unrealistic expectations going forward. Nine to ten percent annual returns seem pretty boring when you hit a home run the first time at the plate in the big leagues of real world investing. After a few years of overly aggressive investing in individual growth stocks (without a clear investment plan) and even attempting some day trading I quickly saw how one positive investment led to many more negative investment experiences based on short-sightedness and greed. My initial gains and timely profit taking to buy a house impacted my future investment behavior and led to future losses.

This also helped me set the stage for what I hope to be my best investment ever which was not an individual stock, bond, REIT, hedge fund, or commodities holding - my best investment was actually in a financial life plan that helped give my investments meaning and purpose. My focus shifted from rates of return, leading market indicators, portfolio volatility, and news headlines to long-term goals and overall strategy. I still focus on the quantitative side of investment planning, but I have shifted to a more passive investment philosophy that is not driven by stock picking or market timing. The biggest emphasis in my investment strategy is found through the use of a written Investment Policy Statement that helps guide my investment decisions in light of my financial life plan. This simple document helps streamline my investments and outlines what fits into my family's investment portfolio. Yes, I still want the highest rate of return possible given my preference for risk. But I am most concerned about whether or not I can achieve important life goals such as sending my kids to college without burdening them with debt and having the freedom to retire on my terms.

What is interesting to me about Scott’s great investment that turned out to be his worst is that it took some depth of thought to pinpoint that the mind set he took on when he had the winner was the cause of his future losses. In other words, he took responsibility for the decision. To me, his answers show a high degree of humility, and his value of “money supporting life” rather than “money for money’s sake” is apparent.

Erik Carter, CFP®, J.D. (and Forbes contributor):

Right now, the worst investment decision I ever made was to go to law school. I didn’t even want to practice law, but once again, I was influenced by the fact that everyone around me seemed to be doing it (going to grad school). I figured a law degree with a focus on tax and estate planning could help my financial career in some way. However, I didn’t give the financial side as much thought this time because I got a full academic scholarship so I thought it wouldn’t cost me anything. What I didn’t factor in was the lost opportunity to save and invest for 3.5 years, which set back some of my financial goals. (I guess that’s why they say time is money.) I also took this job at Financial Finesse after graduating, which doesn’t use my law degree at all, so I haven’t really seen a return on my investment of time. (Granted, it could be much worse. I could be stuck in a job I hate to make payments on a six-figure student loan debt.) It turns out I’m not the only one to make this mistake. With rising student loan debt and poor job prospects, there’s talk now of a bubble in higher education.